Thai government looks to cut back on natural rubber output

BANGKOK—The Thai government is paying natural rubber growers to stop growing rubber in an effort to raise prices, according to news reports from Thailand.

The Bangkok Post reported July 18 that Thailand’s Agriculture and Cooperatives Ministry would try to reduce the country’s NR planting areas by about 80,000 acres per year for the next five years.

The plan permanently would reduce Thailand’s NR production by 40,000 to 50,000 metric tons per year, the Rubber Authority of Thailand told Reuters.

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Charging top officials of the ministry with the task, Deputy Prime Minister Somkid Jatusripitak said the government pledged to pay farmers about $480 per rai (equal to about 0.4 acre), up to 10 rai per family, to stop growing rubber on that land.

The program was set to begin early in August, according to reports. It will concentrate on land that is considered less prime for cultivating Hevea trees, such as low-lying areas and farmland better suited to rice and other crops, they said.

This is the latest announced plan in NR-growing countries in an effort stretching over many years to shore up prices. The earliest such scheme was the International Natural Rubber Agreement, which began in the 1980s and ended in 1999.

Later, from 2001 to 2003, Thailand, Malaysia and Indonesia—which also collaborated on INRA—carried out a plan to restrict rubber production.

In January, the Royal Thai Embassy announced an agreement with Indonesia and Malaysia to cut back NR exports by 350,000 tons during the first three months of 2018.

Despite this action, NR prices fell during the first part of 2018. Prices for Thai rubber smoked sheet 3 stood at $1.7560 per kilogram in early May, but fell to $1.48 by July 26.

Thailand currently has about 7.2 million to 8 million acres planted with NR, according to the Bangkok Post.

Officials of the domestic NR trading industry said they had heard of the new Thai program, but knew little about it except its existence.

One industry source said many small rubber farmers already are starting to desert rubber tapping in favor of other crops, because NR prices don’t provide a living wage. Another said that Thailand’s effort to reduce NR production is in response to overplanting of Hevea trees in 2011.

Officials of the Royal Thai Embassy could not be reached for comment about the new program.